Notes From All Over -- Part 1 -- The Culver City Edition -- October 12, 2021

Southwest Airlines, weather:

The Permian: shale oil is booming again. Link to Yahoo!Finance. But looks who drilling.

Enbridge: this is the third time I've posted / linked this story. It's that big a deal. Zacks article here.

Southwest Airlines: apparently the weather is still  impacting Southwest Airlines.

Apple, Inc: previously posted, another huge story that needs repeating: Apple is building a massive new campus straddling Los Angeles and Culver City. Archived. In addition to everything else, this will re-vitalize that area of west LA; this is huge:

• will be located along National, Venice, and Washington boulevards
• two huge facilities; connected by a "shared wall"
• in the big scheme of things, this is prime real estate in an incredible part of the city
• about ten miles up Venice Boulevard from the ocean, Venice Beach
• this will really, really re-invigorate this area
• the addresses of the new buildings are 8825 National Blvd. and 8871 Washington Blvd. in Culver City, and 8827 and 8829 National Blvd. and 8876, 8884, 8886 and 8888 Venice Blvd. in the City of Los Angeles.

Apple, Inc: close to another milestone -- will join Saudi Aramco with $100 billion in profits, annually. Link here. In another five years, three other companies could join the club: Alphabet, Amazon, Microsoft.

T: I've long lost interest in ATT as an investment, and it's only going to get worse, but a two-second soundbite regarding ATT, the telcos, and streaming reaffirmed my excitement for copper.

The Fed: may taper but it's not going to start raising rates any time soon. Analyst. Link here. 

$80-WTI: won't destroy demand or hurt the economy. Link to Tsvetana Paraskova. 

Huge: Netflix partners with Walmart.

Target, posted September 23, 2021:

• Target announces it will not hire additional seasonal workers for the holidays.Obviously our local Target store did not get the memo. The store has big signs at the entrance advertising seasonal hiring at high hourly rates.

Sports: I've never cared for Jon Gruden but I never would have wanted to see this. Resigns as Raiders coach after more leaked e-mails from 2011 reveal homophobic, misogynistic language. Link here. This is ten years ago, but didn't folks know by then that e-mails never disappear?

New vaccines, medicines to prevent / treat Covid: Merck and AstraZeneca.

Nvidia.

Chariots on fire: LG to pay upwards of $2 billion to GM over Bolt EV battery fires. Link here. In pre-market trading, GM is up 1%.

WTI Starts The Day At $81.10; One Well Coming Off Confidential List -- October 12, 2021

US: economy can easily handle $130 - $150 WTI. That's why folks are not screaming about $80-WTI. And Resident Biden knows that. 

Europe: energy crisis -- another major manufacturer will stop production November - December, 2021. Link here. Spanish steel maker Sidenor.

India: could soon be on the brink of a power crisis. Coal. CNBC.

NE USA: price of heating oil could surge this winter. Link here. Remember: lack of natural gas pipelines.

ISO NE: link here. Seems to spike every weekday morning from 5:00 a.m. to 6:00 a.m., then drops back again before spiking again, albeit a bit lower, starting about 7:00 a.m.

US gasoline exports: new seasonal highs in May, June, and July. Link here. Resident Biden's team says they will take all necessary steps to tackle high price of gasoline. Well, this seems like a good place to start. LOL. Of course, the refiners will simply scale back operations. 

High price of gasoline: even the political class in Washington, DC, can't miss it now. Link here.

High price of gasoline: only eight states now average less than $3 / gallon -- OK, MS, TX, AR, LA, KS, AL, MO. Average price across the US: $3.25. The really cool thing about high-priced gasoline: all that cashback on credit cards. LOL.

Saudi Arabia:

• pumping about 9.6 million boepd
• says they have capacity for 11.5 million boepd
• targets new CAPEX to increase capacity to 13 million boepd

California: apparently it passed -- California bans gas lawn mowers and leaf blowers. Link here. One needs to read the law closely but the press is reporting that California bans the sale of these items, not the use. Amazon will have a field day. 

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Back to the Bakken

Active rigs, updated COB by NDIC:

$81.10	10/12/2021	10/12/2020	10/12/2019	10/12/2018	10/12/2017
Active Rigs	29	13	58	67	59

One well coming off confidential list --

Tuesday, October 12, 2021: 11 for the month, 11 for the quarter, 235 for the year:

• 36916, conf, Whiting, Satterthwaite 14-35TFHU, Robinson Lake, see this note;

RBN Energy: Did Putin pop the global natural gas bubble, or give Europe a last chance to stock up? 

For six months, European natural gas prices skyrocketed higher almost every day. The soaring prices made sense. Gas inventories in Europe were low following higher-than-normal demand last winter. Economies were recovering from COVID-19. Russia was curtailing gas deliveries. It all added up to a likely supply shortage during the winter of 2021-22. And the market did what markets do: anticipate. Even though the next winter season was months away, gas buyers went to work, stocking up on supplies like squirrels gathering nuts. The more prices increased, the more panic buying kicked in. By last Tuesday, October 5, the European TTF price was up more than 5X what it had been on May 1. Then, on Wednesday, a few comments from Vladimir Putin seemed to pop the bubble, and within a few days the Dutch TTF price was down 27%. Is everything OK now? Was the gas-price run-up all just speculative buying and short covering? Or is a supply crunch still on the horizon, and this is just the calm before the storm? In today’s RBN blog, we explore those questions.

Bitcoin Is The New "Gold"; CLR With Five New Permits; Thirteen Permits Renewed; Rig Count Jumps -- October 11, 2021

Stagflation: Jim Cramer takes contrarian view on "stagflation." His views are in line with mine which I have posted. Bottom line: neither he nor I are concerned about "stagflation." 

Stagflation: headline story today Goldman lowered GDP projections. Scary headline. But did anyone report the numbers? Here they are. Be sure to sit down before looking at this huge Goldman Sachs cut when they revised their 2021 / 2022 GDP forecast:

• for 2021: previous, 5.7%; revised, 5.6% -- give me a break; that's a headline story?
• for 2022: previous, 4.4%; revised, 4% -- ditto.

Color me cynical: I saw the Goldman Sachs headline; several readers sent me the headline link; makes me wonder if the readers even read the story -- a revision of 5.7% to 5.6% gets the headline -- from a trading house that is consistently bearish, and if not bearish, tends to speak out of both sides of its collective mouth. A revision from 4.4% to 4% is a bit more bearish but what GDP was Trump seeking? What did he get?

Color me really cynical: compare those revisions with GDP growth under Trump (less than 1%); Obama (1.6%); Bush II (2.2%); Bill (3.88%) ; Bush I (2.3%); the actor (3.5%); and the worse president in modern times (3.3%). If Biden hits 4% he's going to be #1 among the most recent eight presidents. Yes, I know it's all relative. But anyone acting on Goldman's revision for 2021 ... well, what can I say. I have too much faith in free market capitalism to worry about a revision of 5.7% to 5.6%. 

Jim Cramer: there's always a bull market somewhere. And with a projected GDP of 5.6% there should be a lot of opportunities for investors.

Bitcoin: trading over 57,000 is at its highest in five months. Jamie Dimon has aged. He still says Bitcoin is worthless. 

• For me: Bitcoin is the new "gold." Karen Finerman and Jamie Dimon will have to agree to disagree on Bitcoin. 

Trends: I missed it; I'm not sure I'm the only one. It hit home last weekend at Family Weekend at Vanderbilt University, Nashville, TN. 

Horse troughs filled with cold non-alcoholic drinks -- water and sodas. In the past, the water would have been in plastic bottles for sure, and many of the Coke products would have been in plastic. But this time: no plastic whatsoever. Everything was in aluminum cans, most cleverly camouflaged and crafty. But everything was aluminum. Does this suggest to me that the "plastic straw" "woke" crowd finally reached the C-suites in the RTD industry?

If this is accurate: a win for Alcoa?

Another interesting observation: the standard "Coke" can was 12 ounces; if I recall correctly, the standard size "Coke" aluminum can to look like a beer bottle was 16 ounces. Bloomberg must be really, really frustrated.

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Back to the Bakken

Small jump in number of active rigs in North Dakota! But there is a typo: one well is listed twice.

Active rigs, is updated at the end of the day on non-holiday weekday; not sure if Indigenous Peoples Day is a holiday for NDIC or not:

$80.52	10/11/2021	10/11/2020	10/11/2019	10/11/2018	10/11/2017
Active Rigs	29	13	58	68	59

Active rigs:

• CLR (10): Flint Chips FIU, Dolezal FIU, Jack, Whitman FIU, Thorp Federal, Clear Creek Federal, Charolais South Federal, LCU Reckitt Federal, LCU Reckitt Federal, LCU Ralph,
• MRO (3): Seidler USA, Porter, Ermina,
• Hess (3): AN-Norby; BL-Olson; CA-E Burdick; 
• Enerplus (2): FB Leviathan 16B, FB Leviathan 17T,
• Whiting (2): Platt, Ark;
• Crescent Point Energy (2): Reed, CPEUSC Pankake
• Hunt: Halliday,
• Petroshale: Crockett Federal
• Oasis: Swenson Federal,
• Ovintiv: Bernice,
• Sinclair: Grasslands Federal,
• Slawson: Rainmaker Federal,
• Kraken: Alamo

Five new permits, #38606 - #38610, inclusive:

• Operator: CLR
• Field: Cedar Coulee (Dunn County)
• Comments:
• CLR has permits for five wells in SESE 4-146-96, Cedar Coulee
• four of the wells will be sited 551 FSL and between 562 FEL and 652 FEL; one well will be sited 550 FSL and 427 FEL (assuming there was no typographical error)

Thirteen permits renewed:

• Crescent Point Energy (8): one Dorothy permit; four Narcisse permits; and, three Austin permits, all in Williams County
• Grayson Mill Operating(5): five Tufto permits, all in Williams County;

Notes From All Over -- Part 2 -- The Road To New England -- October 11, 2021

From New Hampshire Business Review: New Hampshire electric rates to jump due to spike in natural gas cost. Sixty percent hike in rates seen for Unitil customers.

Is anyone paying attention? How did that pipeline action work out?

Again, utility rates will jump sixty percent. 

Link here. 

Look at this:

Electric rates for the winter are going up a lot, and two utilities have announced rate hikes that take into account the dramatically higher cost of natural gas: Unitil and the New Hampshire Electric Cooperative.

Unitil’s winter rates will rise 60 percent for a household that uses around 650 kWh per month, while the New Hampshire Electric Cooperative customers can expect a 17 percent increase compared to summer rates.

In both cases, the reason for the dramatic increase in the cost of electricity is tied to the spike in the cost of natural gas.

See comments: from a reader, this link. 

ISO NE is tracked here. At the moment, 87% of energy demand supply by the two "n's" -- natural gas (75%) and nuclear (12%).

The Energy Crisis -- Trolling -- October 11, 2021

This sudden energy crisis is absolutely fascinating. I've still not seen a good analysis.

It would be interesting if anyone can come up with the "single event" that precipitated the whole crisis.

Remember Richard Feynman's explanantion for the Challenger disaster? That's what I'm looking for. I'm looking for a Richard Feynman who can show in one simple graph how this energy crisis seemed to have happened overnight.

I have an idea and will post it later but it will be posted deep in the blog so I have the time/date stamp for bragging rights, but I want to bury it so I don't have to put up with a lot of push back from readers before some time has passed to see how this has played out.

 

The answer will be in two graphs -- technically four graphs but only two are needed, but I had to expand those two to make it clear. 

 

Some hints:

• the answer is not "under investment" in fossil fuel production;
• the cause of the crisis is not related to supply chain issues;
• to some extent the cause might be geopolitical but that's only part of it;
• some will argue the cause was all about renewable energy, it was not, but there is a connection;
• the explanation is incredibly simple; because it is so simple, the explanation will result in a lot of push back; it's human nature not to accept a simple explanation for something that seems complicated (see the Fehnman link above);
  
• but again, the challenge is to find the "one thing" that precipitated the current energy crisis